© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited 1

Utilizing Simulation to Determine a Retail Best Practice Abstract #A4066 Kate Fisher and Joel Brock West Monroe Partners IIE Annual Conference 2014 – Montreal, Canada

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited  West Monroe Partners (WMP) Operations Excellence (OPEX) Solution Line Our Team delivers IE solutions in the retail industry space  Joel Brock BS/MS IE from Northern Illinois University 14 years of IE/OE experience  Kate Fisher BS IE from The Ohio State University Simulation modeling expertise 3 Introduction Background The main objectives of this study are:  Review how “best practices” play into retail and why simulation is a great tool to help make business decisions  Present information on differing stocking methodologies, how these impact the retail store, and why this case study was chosen  Portray the approach used in testing the stocking “best practices” using simulation, share how others can use the approach  Illustrate the outcomes of the simulation study  Share key lessons learned Objectives

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited 4 Stocking of Product Customer Service Why Use Simulation to Determine Best Practices? Register Processing When engineering the retail world, fixed measureable processes are integrated with the more randomly fluctuating aspect of the customer. As a retailer develops a process both the controllable aspects of the process and the variable aspects must be considered. Core Retail Process Examples: Develop Current State Processes Benefits of Simulation as a Process Analysis Tool Ability to model activities that have variable components Ability to test multiple iterations to scenarios without having to facilitate and setup live tests No limitations in a virtual world Simulation Process Mapping Value Stream Mapping Tools to Analyze Processes While possible in static models to capture variable elements, simulation provides a virtual environment where multiple variable elements can be modeled to interact as they would in the real world. Simulation can provide backup proof and data that validates that a best practice is truly a best practice. Others

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited 5 Common Retail Stocking Methodologies Stocking with Pre-Loaded Cart  Associate stocks with an already loaded cart, relies on knowledge of aisle and product locations  Store floor remains clear of obstacles and debris Stocking with Case Spotting  A member of the team with product placement knowledge pre-positions the cases in the correct aisle near the product location for a second group of associates to follow through and stock to final location  Creates a double handle of each case and places obstacles in the aisles which can affect the customer

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited 6 Approach Stocking with Pre-Loaded CartStocking with Case Spotting Baseline – determine a baseline scenario (same cases, aisles, product) that will be modeled utilizing both processes Build – create two models that utilize the same baseline data run through the two different processes Analyze – test both models determine which process steps cause the most variability to the outcome Design – based on the model output, present a preferred best practice that minimizes the labor requirement

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited 7 Findings Stocking with Pre-Loaded CartStocking with Case Spotting The final results and recommendations will be presented live at the conference session

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited Key Stocking Lessons Learned Staging Location Stocking Variables 8 Cart Travel Rework Search Time Best Practices TBD Recommendation TBD

© 2013 West Monroe Partners | Reproduction and distribution without West Monroe Partners prior consent prohibited Questions? 9 Contact Information: Joel Brock Kate Fisher